Outbid by Volkswagen for Rolls-Royce and overshadowed by Daimler-Benz's $38-billion merger with Chrys-ler, BMW could be licking its wounds.

Instead, buoyed by the success of its sporty Z3 roadster, the other German luxury carmaker is expanding its first U.S. plant in Spartanburg County, SC, to build a 2000 model sports-activity vehicle that handles like a sedan but shares some of the bulk of a truck.

BMW will spend $600 million to nearly double the 1.2 million-square-foot (111,480-sq.-m) plant that produced its first vehicle in September 1994. The expansion will increase BMW's Spartanburg employment from the current 2,000 to 3,000 people.

When complete in 2000, the renovated plant will have two assembly lines, one making Z3 and M roadsters, the other making the sports-activity vehicle. The M roadster recently went on sale, and its partner, the M coupe, will be launched later this year. The coupe will be built on the same line as the roadsters, 60% of which are exported.

Five new suppliers are expected to locate in South Carolina to support the vehicle project, adding to the 22 suppliers already there (see p.46).